Financing Sustainable Energy for All: Pay-as-you-go vs. traditional solar finance approaches in Kenya

Working Paper
  • Published 03/03/14

This paper focuses on finance for Solar Home Systems (SHSs) in Kenya and asks to what extent emerging new finance approaches are likely to address the shortcomings of past approaches.  Drawing on the STEPS Pathways Approach we adopt a framing that understands finance within a broader socio-technical context as a necessary but not sufficient component of achieving alternative pathways to sustainable energy access.

The paper contributes in four ways. Firstly, it presents a comprehensive overview of past and new emerging approaches to financing SHSs in Kenya and their relative strengths and weaknesses.

Secondly, it represents one of the first attempts in the literature to analyse the potential of new, real time monitoring technologies and pay as you go finance models to overcome the barriers faced by conventional consumer finance models for off-grid renewable energy technologies (RETs).

Thirdly, by applying for the first time we are aware of a socio-technical approach, via the application of Strategic Niche Management (SNM) theory, to analyse the finance of RETs in developing countries, the analysis considers finance in the context of the social practices poor people seek to fulfil via access to the energy services that off-grid RETs provide, and the ways in which people previously paid for these services (e.g. via kerosene for lighting). This also situates the analysis within the understanding of SHSs as a niche that has to compete with the established regime of energy service provision and its attendant social and political institutional support.

The paper therefore also contributes to the small but expanding body of literature that seeks to operationalise socio-technical transitions thinking and SNM within a developing country context.

Published as part of our project Pro-poor, low carbon development: Improving low carbon energy access and development benefits in Least Developed Countries